Musings on World events from the perspective of a Social and an Economic Liberal.

Monday, May 17, 2010

Founding the Tallinnban

An economically liberal friend of mine whose politics nevertheless tend to haver between the Conservatives and the SNP contacts me from an overseas trip. He says that he fears that the coalition will simply continue the economic policies of Gordon Brown. Although I point out that those policies can not be sustained anyway, he remains nervous. In fact I have little doubt that the budget now announced for June 22 will show some very nasty red ink indeed. The question will be how to create a policy response that walks the line between fiscal responsibility and economic recovery. Most importantly of all, there is the question of the essential investment in public infrastructure such as Crossrail and HS-2. Are these projects to be delayed or even sacrificed because we still do not have a coherent approach to social welfare?

The fiscal drag created by Gordon Brown- i.e.the administration cost of collecting taxation on the one hand, and paying out benefits such as child credits on the other- is clearly very high. How high, we are not permitted to know: it is essentially a state secret. Nevertheless the integration of tax and benefits is long overdue- and it is time to abolish the collection of National Insurance separately, and be up front about what it is: an enhanced form of income tax. The government needs to get serious about the fact that we are funding long term payments, such as pensions, directly from current expenditure. We have no National Insurance Fund. If we did, then by now the level of income tax would have been reduced to less than 20%, since the rest would be funded by the National Insurance Endowment, as David Lloyd George originally intended, when the state pension was introduced.

No post-Communist country has followed the UK in its pay-as-you-go pension policy, all have created an endowment fund structure for future pensions, and yes that has had a drastic impact on those who were already retired, or are about to be: the spectacle of elderly ladies trying to sell flowers in the middle of snowy nights is one of the saddest sights in wintry Tallinn, although in fact they do seem to manage to get by somehow. The crucial point is that the social sacrifice is being made by today's old folk in order to fund a better life for their children. In Britain the impact of scandalously early retirement has been a huge transfer of wealth from the young to the old. With the smash and grab raid that Mr. Brown made on private pensions, the fact is that the British pensions cupboard is bare: and that is a developing crisis. Meanwhile the idea that "relative poverty" can or should be alleviated by redistributive taxation is being tested to destruction. Welfare families are indeed a reality- and one increasingly bitterly resented by those of us bearing the brunt of increasing taxation. The failures of education and the poverty of aspiration has left a group of unemployed and unemployable people, dependent on benefits. That the work is there is obvious: how else could we have around half a million central and eastern Europeans working in our country? But the question that Mrs Duffy should have asked in the election is why so many British workers are either unwilling or unable to take on the kinds of jobs that are being done by Poles, Lithuanians or Slovaks.

In any event, we can not afford this welfare burden: despite the recognised social evil of too wide an income gap I do not think that we can fix it in the way that we have chosen. The average income gap in a corporation has risen from 5x to 22x in forty years, but punitive taxation is clearly not the answer. Relative poverty has not been alleviated by public handouts: the gap grows ever wider. The time has indeed come to think the unthinkable, but that may well mean some pretty tough love on welfare: no welfare without work is an obvious start.

I also still believe that the issue of illegal- as opposed to legal mostly eastern European- immigration can not be solved unless we address the tens of thousands who have now been resident in the UK for over ten years. I believe an amnesty should indeed be offered to those already here, and then the policing of new immigration could be stepped up as resources are transferred to this, rather than the useless, toothless waste of border agency officials pursuing those already here: we are not going to expel thousands of people who have already integrated well into our country- that really does make no sense. Making these people legal is another way to improve tax receipts too.

However to enact these policies we are going to need to challenge something that is currently being defended rather strongly: the culture of secrecy and lack of accountability in the British government. The temptation to keep things secret is a very strong one for both politicians and state officials, especially in a coalition. Yet it is very dangerous to remove accountability- in the darkness, incompetence and corruption flourish. Paradoxically it also means that the most important state information becomes far more vulnerable to loss or misuse.

I have always opposed ID cards in the UK. I have supported them in Estonia, and this has led some people to suggest that I am being inconsistent. Let me explain why not. The difference is in the relationship that the individual has with the state in Estonia. Firstly, the citizen is allowed to know all the information that the state holds about them. Secondly, the systems are extremely secure: there is no evidence of them ever being successfully penetrated, even when the Russians launched their cyber-war against Estonia three years ago. Finally, the individual is able to find out whenever a state institution accesses their data, and to know which individual did so and for what purpose. Essentially the Estonian state is transparent to its citizens: all government meetings are publicly documented. The only exception is in extremely limited issues of National Security- and all such instances take place under the auspices of the Ministry of Defence or the Kaitsepolitsei: that is it. By contrast the UK presumes that all information is secret and that the citizen has only limited rights to find out even fairly mundane information- even to challenge mistakes in the data. This is what has allowed corruption scandals in the Home Office to be essentially unreported. In any event the British Press is more interested in the cheap thrills of Page Three than the expensive slog of real reportage. (Before the Daily Telegraph gets too smug, I would just note that the expenses scandal story was sold to them- they did not discover it for themselves).

So, perhaps Liberal Democrats and those who sympathise with liberal ideas amongst our coalition partners should now be thinking not just in terms of the nuts and bolts compromises of daily legislation, but also in terms of the big picture: the need for genuine political openness, the need for radical welfare reform, the need to rebuild our national endowment capital. Those who support these genuinely Liberal ideas may be regarded by the Liberal Democrats on the front bench with a questioning eye, but as my friend says: this government will need some clear strategic thinking, and they may be too bound up in tactical battles to see the real goals they need to go for. A Radical Liberal voice could still make all the difference, so at his suggestion I propose a group of like minded liberals, even those amongst the Conservatives as well as the large number in the Liberal Democrats to continue to focus on the big picture, the long term story and the whole vision of Liberalism.

5 comments:

I'm afraid I do find your views on ID cards inconsistent. The implication is that if UK ID cards could be made transparent and secure, you - as a Liberal - would be happy to support them. But this is mere mechanics. The principle behind opposing or supporting ID cards is intimately connected to how the relationship between the state and the individual is viewed, and closely aligned with how the individual interacts with the state - either has a citizen who in some some senses owns the state (and themselves), or as a citizen who is in some sense licensed by the state. Transparency and security are no protection against a fundamental transfer (as it would be in the UK case) of information of the individual to the state. Information is connected to power, of course. Since the munificence and reliability of the state can never be guaranteed (and you'd have thought this would ring loudly in Estonian ears), the prudent course of action is to never allow the state to accrue informational or identity powers in the form of ID cards over the citizen, or to tear down such structures where they exist.

Of course, these are all negative arguments, and I would be interested in knowing what supposed benefits ID cards bring to Estonians.

Hi Joe, I completely agree, the issue of ID cards is not simply a matter of mechanics, it is absolutely a fundamental part of the relationship between the Citizen and the State. The difference is that the entire structure of the Estonian state is constructed on the foundations of transparency, and as a result, were the state to even think about some of the issues you rightly highlight, the citizens would know. Remember essentially all state information- including the minutes of all meetings- is, by definition, in the public domain.

The benefits of a system based on transparency for the Estonians are technological. They have a system that validates their identity online in all official dealings, so 95% of tax returns are made online and validated by digital signature. I have voted online, I can transact all public business via computer, wherever in the world I happen to be- and the cost savings of the online state are spectacular.

The point is that the e-government held information is like a safe: only those who hold a key may enter, and they can only do so by revealing their purposes- so you know everything the state knows about you- and can challenge details if necessary. Totally different in the UK, which is why, for precisely the reasons you name I oppose ID cards in Britain.

Thing is, it's a state. It already knows a whole bunch of stuff about me, that's just what states do. At least with an ID card we're dealing with an 'I know that you know' situation here.

As for what benefits it brings me - I spent a whopping 18 minutes doing my taxes this year. It made it easy to authorize forwarding pre-formatted data from my bank to the Tax Board servers, which took it and filled the required slots on the forms. Most of this time was spent on reviewing the numbers before signing it, digitally.

That's another benefit right there - the state guarantees my identity online when requested to do so. And for that I don't even have to whip out a card reader - ID cards in their actual card form are already passé. The tech used there and solutions developed have made their way into our SIM cards; my mobile (just a basic one) turns into a secure keypad upon request to allow me accessing any state-provided services online. Or private ones, who have joined up with he scheme - most of the banks, for example.

After this service became available the old card has only seen use when traveling in EU; being the primary ID used in a member state it's accepted everywhere. I still have dig out my passport whenever I cross EU borders, though.

I can't really think of some mysterious data the ID card or services/technologies tied to it would enable the state to gather over what it already knows about me. I may have to browse Cicero's archives to find out exactly how British govt has managed to create opposition to such a wonderfully simple and convenient tool.

While I have nothing against ID cards as a means of easing financial transaction, replacing separate passpots & driving licences or to be used as an entitlement card the Labour proposal for a card with an embedded RFID chip capable of locating our wherabout to within six feet and the requirement that we carry the card at all times with failure to comply being made a crime is tyrannical.

Also the idea that any data held on government databases is in any way safe from enemies of the nation,criminals or malicious jokers is risible.

To trasfer so much of our highly personal business online as the Labour government would have liked we would have to return to IBM and ICL mainframes with their proprietary technologies and private data networks. The internet and the Microsoft / Intel technology that runs the user end of it is joust not secure.

But the question that Mrs Duffy should have asked in the election is why so many British workers are either unwilling or unable to take on the kinds of jobs that are being done by Poles, Lithuanians or Slovaks.

Because Mac Job money goes a long way in Warsaw. Some of this is thrilling on immigration however you are talking nonsense and I am not quite convinced by the ID card thing. Still opposing them here ins the main thing.